Strategic Outsourcing through Specifications

Outsourcing is one of the top priorities on the strategic agenda of Original Equipment Manufacturers [OEMs] in many industries. The decision of outsourcing an activity as opposed to doing it in-house and the development of a part or parts system is one of the most complex decisions facing today's industrial managers. Several models have been developed in order to aid in this process. The present paper analyses some of these models, and proposes an extension based on the role that specifications might play in outsourcing decisions. Based on how the specification is generated and on the nature of the data it contains, it can be of significant help in outsourcing decisions. The research reported in the paper is based on a longitudinal study of one automotive OEM [global family], one truck OEM and four medium sized expert supplier, all located in Europe. A procurement matrix is developed in which guidance for outsourcing decisions is provided in terms of specification generator, type of supplier, and contract relationship.Outsourcing; Specifications; collaboration; automotive industry

The role of specifications and contracts in outsourced product development in the automotive industry

D.B.A ThesisMuch attention has been paid to relationships between supplier and buyer finns, especially in the field of product development and in particular in the automotive industry. There has been a growing debate on the need to increase the responsibilities for suppliers and have a win-win relationship with them instead of an adversarial relationship. Research has been extensive, dealing with issues like location of suppliers, just in time, tiering of suppliers, etc., although little attention has been paid to the issue of specifications and contracts which are an important part of the product development process. The specification flow between the buyer and suppliers is necessary in order to obtain the product. Specifications could be validated' with the help of written contracts and thus can be seen as an important part of the contracts. The objective of the study is to understand the role of specifications and contracts in these companies and thus contribute to knowledge and the understanding of practitioners. One automotive OEM located in Europe was used for the case study. One aircraft OEM, also located in Europe, was used for supplementary data collection. In-depth interviews in five first-tier suppliers, and an open ended questionnaire survey (internal and external) have been used to provide complementary perspectives. The research2 is guided by a qualitative inductive approach and is aimed at developing ideas grounded in field observations. Strauss & Corbin's (1990) method for coding qualitative data has been followed in order to model the role of specifications and contracts. Data was gathered through semi-structured interviews with various managers in the OEMs and supplier companies, participant and direct observation, internal documents, and questionnaires. Specifications were identified to have a role in guiding outsourcing decisions, function as a means of communication, help decide the time of involvement of the suppliers, help differentiate suppliers, create visions for suppliers and help provide competitive advantage. Contracts were identified to have a role in reaching agreements for continuing supply and help assist in the validation of specifications.Dr Larry Burns, Vice President (R&D - General Motors): Kjell Ake Eriksson,Auto OEM

Strategic outsourcing through specifications

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Lean supply and price based global sourcing The interconnection

SIGLEAvailable from INIST (FR), Document Supply Service, under shelf-number : DO 7084 / INIST-CNRS - Institut de l'Information Scientifique et TechniqueFRFranc